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Brown & Brown (BRO) Boosts Shareholder Value With Dividend Hike

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In its concerted efforts to enhance shareholder value, the board of directors of Brown & Brown, Inc. (BRO - Free Report) approved a 10.8% hike in its dividend. With this, the payout now stands at 10.25 cents per share compared with the earlier payout of 9.25 cents per share.

This marks the 28th straight year of dividend hike. The raised dividend will be paid out on Nov 17 to shareholders of record as of Nov 3.

Prior to this, the company had raised quarterly dividend by 8.8% in October 2020. Historically, it boasts a consistent increase in dividends with the metric witnessing a six-year (2016-2021) CAGR of 3.1%.

Based on the stock’s Oct 19 closing price of $64.09, the new dividend will yield 0.6% to the company.

Besides regular dividend hike, Brown & Brown remains committed to returning excess cash to shareholders through share repurchases. The insurer bought back shares worth around $672.8 million from the beginning of 2014 till Jun 30 of this year.

Brown & Brown enjoys a strong liquidity position, which not only mitigates balance sheet risks but also paves the way for accelerated capital deployment. Also, strong cash flows have enabled the company to undertake several strategic initiatives such as buyouts and mergers, which position it well for long-term growth.

The recent dividend hike further reinforces the company’s sound financial prospects. Brown & Brown exited second-quarter 2021 with a sturdy cash balance of $850.2 million, which increased 4% from the 2020-end level. This suggests that the company has sufficient cash reserves to meet its short-term debt obligations. With additional capital, a revolving line of credit and strong generation of cash, the company remains well liquidated.

Shares of this Zacks Rank #3 (Hold) insurance broker have gained 37.7% in a year compared with the industry’s growth of 31.8%. The company’s efforts to expand capabilities and extend geographic footprint through buyouts and its solid capital position should continue to drive shares higher.

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Recently, another insurer, First American Financial Corporation (FAF - Free Report) undertook a similar measure. It has hiked its dividend by 11%.

Stocks to Consider

Some better-ranked insurance stocks include Arthur J. Gallagher & Co. (AJG - Free Report) and Marsh & McLennan Companies, Inc. (MMC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arthur J. Gallagher has a trailing four-quarter earnings surprise of 13.51%, on average.

Marsh & McLennan has a trailing four-quarter earnings surprise of 13.88%, on average.

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